NEO Is A Multi-Billion Dollar Disaster
Also see the follow-on article: Someone Bought Reddit Bots to Censor My Article On NEO, But It’s Not Working
Many of my readers know that I have been highly critical of NEO. This has brought me the ire of NEO’s community. However, I’m not going to stop warning the larger cryptocurrency community of questionable projects because this is how we grow together and this is how a legitimate industry is built.
As I continue to research NEO and follow its community, I continue to find more and more red flags surrounding this multi-billion dollar project. In a previous post, I talked about how NEO was incredibly centralized, that the network had an alarmingly small number of smart contracts, and that there was no Eastern interest even though a rumour kept getting propagated that NEO is compliant with the Chinese government and has its support.
Now, as more and more ICOs start to be conducted on NEO, I’m seeing a serious divergence between the platform’s advertised performance and its actual performance. Da Hongfei, NEO’s cofounder, has claimed that NEO is able to support 1000 transactions per second. However, if you follow the community closely, you’ll realise that this claim is quite dubious. Whenever an ICO is run on NEO, you will see complaint after complaint of the network being down or wallets not working. This is not characteristic of a blockchain capable of 1000 transactions per second.
It’s also been increasingly evident that NEO’s smart contract infrastructure has issues as well. Many developers that have tried to build on NEO have encountered heaps of problems with the system. To make matters worse, NEO forces developers to pay tens of thousands of dollars simply to deploy a smart contract.
In this article, I’ve compiled a series of social media comments from NEO’s community lamenting its problems. Don’t take my word on how problematic NEO is, here’s what its own investors are saying about NEO.
Single ICOs are bringing NEO’s network to a halt
NEO has experienced major outages during ICOs. It’s interesting to note that NEO has so far hosted at most one concurrent ICO on its platform and still, its network is not able to handle the load. For a centralized platform that is supposedly capable of running 1000 transactions/second, not being able to handle load from a single ICO is very very surprising.
Here are a few ICOs that have caused significant network outages on NEO recently.
Red Pulse
The Red Pulse ICO took place in October last year and it was NEO’s first ever ICO. This was the first time NEO was put through the strains of hosting an ICO and the blockchain faltered. NEO’s block times are typically around 30 seconds yet block 1,445,026 took almost 4 minutes to generate. The outage was brief enough that very few people took it seriously but this was still an outage nonetheless.
Trinity Network Credit
During Trinity’s ICO, NEO’s network went down for almost half an hour. The popular NEON wallet by the City of Zion also stopped working and users were not able to send transactions, claim gas, or sync their balance. It also seems like the ICO was organized very poorly by the admins, with the website going down and the Telegram group filled with trolls and scammers.
Blocks 1816382 and 1816382 were produced during the Trinity ICO. Notice how it took 25 minutes for NEO’s network to create block 1816382. It then took another 12 minutes to create block 1816383. The network resumed normal operation after block 1816383 with new blocks being created every 30 seconds or so. This is indisputable evidence that the blockchain went down during the ICO.
https://www.reddit.com/r/NEO/comments/7qdjpo/40_minutes_of_trinity_ico/
Here’s further confirmation that the network went down. Users are also discussing a NEON wallet outage.
https://www.reddit.com/r/NEO/comments/7qdjpo/40_minutes_of_trinity_ico/dsoh8ug/
Here’s evidence that the ICO was managed poorly. The admins were apparently also exhibiting very questionable behaviour calling people to send NEO even after the cap was reached.
TheKEY
Like Trinity, TheKEY’s ICO went poorly. Again, NEO’s network sputtered and the ICO itself was terribly organized. Here’s a very good article on the fiasco: THEKEY.RIP: The Story Behind The Worst ICO of 2018.
Here’s an excerpt from the article linked above.
https://www.reddit.com/r/CryptoCurrency/comments/7qiz8w/the_key_vip_worst_ico_of_2018_so_far/
Bridge Protocol
The Bridge Protocol’s ICO is the latest ICO disaster on NEO. Again, the blockchain and wallets went down during the ICO.
https://www.reddit.com/r/NEO/comments/7zecxd/daily_discussion_february_23rd_2018/dunstm1/
https://www.reddit.com/r/NEO/comments/7zecxd/daily_discussion_february_23rd_2018/dunm00g/
https://www.reddit.com/r/NEO/comments/7zecxd/daily_discussion_february_23rd_2018/dupxev0/
A Bridge Protocol admin blames network issues on NEO’s blockchain.
https://www.reddit.com/r/NEO/comments/7zecxd/daily_discussion_february_23rd_2018/duoy8ke/
NEO admits that there are ongoing problems with nodes on the network. This prompts some investors to question NEO’s advertised capability of being able to support 1000 transactions per second.
https://www.reddit.com/r/NEO/comments/7zfnmh/neon_014_not_working/dunzlyx/
https://www.reddit.com/r/NEO/comments/7zecxd/daily_discussion_february_23rd_2018/dunw78b/
NEO experiences an outage even without an ongoing ICO
Two days ago, NEO’s blockchain went down for more than two hours. There was no ongoing ICO when this happened. Many people went on Reddit to inquire and complain about the downtime.
https://www.reddit.com/r/NEO/comments/81el6n/we_appear_to_be_stuck/
It turns out, a single consensus node out of the seven operated by the team went down because of an unexpected edge case. As such, manual intervention was required to restart the blockchain. At the surface level, this might appear to be an easily fixeable bug but it’s actually much worse. The most basic problem for a fault tolerant consensus system to address is the recovery process when a single node goes down. NEO’s main net has been out for more than a year now and it should be incredibly surprising that its consensus algorithm is still vulnerable to single node downtimes.
Here’s an in-depth discussion on the problem by Eric Wall, a cryptocurrency developer and writer for Bitcoin.com.
Eric’s tweets went viral and they were acknowledged by many prominent cryptocurrency leaders like Charlie Lee, Emin Gün Sirer, Jared Tate, Xinxi Wang, and Vlad Zamfir. They all agreed that NEO has a serious problem.
People have problems building NEO smart contracts
It’s becoming increasingly evident that smart contract developers are encountering many problems developing on NEO. Several have even accused the system of being poorly coded. To make matters worse, NEO’s team has imposed a tremendous financial barrier to deploying smart contracts. The fee to deploy a smart contract is 500 GAS, which is more than $15,000 at the current price of GAS. These problems explain why there are so few smart contracts on NEO, and why the rate of growth of NEO smart contracts is so anemic.
The head developer of a popular Ethereum dApp, Etheremon, recalls his experience developing on NEO.
Here is a post on NEO’s subreddit calling for smart contract developers to keep trying and not be demoralized.
https://www.reddit.com/r/NEO/comments/7yvzxa/a_message_to_all_new_neo_smart_contract_developers/
The NEO community’s initiative to setup a NEO Stackexchange community was recently denied on the grounds of a lack of interest.
This Reddit user who claims to have tried developing NEO smart contracts before calls the smart contract system “almost unusable right now”. In addition, there seems to be very poor support for multi-language development even though this was a widely advertised property for NEO’s smart contract 2.0 system released last year.
Summary
I was one of the earliest cryptocurrency analysts to raise red flags on NEO. However, because the project was less popular with lower usage then, the problems I raised were theoretical and not tangible. Over the past few months, NEO’s popularity has skyrocketed and so has its platform usage. This has made the platform’s inherent problems increasingly evident. Users experience these problems through a rising number of network outages. Many developers are also eschewing the system for greener pastures as they encounter issues with a poorly coded smart contract system.
I do not want to tell anyone how to invest their money. However, I do want to educate investors on the strengths and weaknesses of the different platforms out there. Cryptocurrency investors tend to treat the projects they have invested in as sports teams and often turn a blind eye to the project’s problems. NEO’s investors are no exception. Don’t fall into this trap, stayed informed.
Also see the follow-on article: Someone Bought Reddit Bots to Censor My Article On NEO, But It’s Not Working